Latest Accounting News
Hot Issues
Small businesses may ‘collapse under strain of payday super’, IPA warns
ATO’s hands tied with scrapping on-hold debts, expert says
What Drives Your Business Growth and Profits?
Australian Taxation Office (ATO) shifting to firmer debt collection activity
Why employee v contractor comes down to fine print
Sharing economy reporting regime for platform operators
Countries producing the most solar power by gigawatt hours
Illegal access nets $637 million
Accessing superannuation benefits.
Does your business have a company Power of Attorney?
Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
GrantConnect
2 in 3 SMEs benefit from instant asset write-off, survey reveals
Updated guidance on R&D claims
Do you know how to recover debts?
Wheat Production by Country
Types of small business benchmarks
What is a Commercial Lease?
ATO warns advisers against suspect R&D tax claims
The year of workplace law upheaval
How to Resolve Invoice Payment Disputes
Raft of revenue tweaks in MYEFO to raise millions
The Countries that Export the Most Wine in the World
Record low invoice values ‘reveal inflation sting’
A 2023 Advent Calendar for our clients
Average refund plummets by $580, total payout down $5.4bn
FBT – Christmas Parties and Taxi Fare/Rideshare
Articles archive
Quarter 4 October - December 2023
Quarter 3 July - September 2023
Quarter 2 April - June 2023
Quarter 1 January - March 2023
Quarter 4 October - December 2022
Quarter 3 July - September 2022
Quarter 2 April - June 2022
Quarter 1 January - March 2022
Quarter 4 October - December 2021
Quarter 3 July - September 2021
Quarter 2 April - June 2021
Quarter 1 January - March 2021
Quarter 4 October - December 2020
Quarter 3 July - September 2020
Quarter 2 April - June 2020
Quarter 1 January - March 2020
Quarter 4 October - December 2019
Quarter 3 July - September 2019
Quarter 2 April - June 2019
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 3 July - September 2014
Quarter 2 April - June 2014
Quarter 1 January - March 2014
Quarter 4 October - December 2013
Quarter 3 July - September 2013
Quarter 2 April - June 2013
Quarter 1 January - March 2013
Quarter 4 October - December 2012
Quarter 3 July - September 2012
Quarter 2 April - June 2012
Quarter 1 January - March 2012
Quarter 4 October - December 2011
Quarter 3 July - September 2011
Quarter 2 April - June 2011
Quarter 1 January - March 2011
Quarter 4 October - December 2010
Quarter 3 July - September 2010
Quarter 2 April - June 2010
Quarter 1 January - March 2010
Quarter 4 October - December 2009
Quarter 3 July - September 2009
Quarter 2 April - June 2009
Quarter 1 January - March 2009
Quarter 4 October - December 2008
Quarter 3 July - September 2008
Quarter 2 April - June 2008
Quarter 1 January - March 2008
Quarter 2 April - June 2007
Quarter 2 April - June 2006
Quarter 1 of 2015
Articles
ATO states estimates are acceptable
Hockey considers super access for first time home buyers
Reportable Fringe Benefit Amount - Employer Reporting
Simple Mistake on Share Transfer
ATO highlights billions in forgotten super
In a bankruptcy what does a trustee do?
Bankruptcies, what are they?
SMSF trustees unprepared for new collectibles rules
We wish all our clients a Merry Christmas, a Happy New Year and a restful holiday
Employee Christmas Parties and Gifts – Any FBT?
Breaking down the latest ATO determination on TRIS
ATO states estimates are acceptable

 

Tax Ruling 97/25 details the requirements



       


Subsection 262A (4AJA) of the 1936 Income Tax Assessment Act requires the previous owner of a property to provide the new owner with relevant construction cost information. This is designed to allow the new owner to determine any capital works deductions that may be available.


Capital works deductions refer to claims that can be made due to the wear and tear of the building structure; including walls, floors and roofs.


It is the requirements outlined in Subsection 262A (4AJA) which leads BMT Tax Depreciation to request any available construction costs and details from property owners each and every time a tax depreciation schedule is produced.


Legislation recognises that this transfer of information between owners is not always possible for a multitude of reasons and has included a provision in the Act to allow the construction cost estimates prepared by a qualified professional to be submitted.


Outlined within TR 97/25 is the list of professionals deemed qualified to provide construction cost estimates.


This list includes:


  • Quantity Surveyors
  • Clerks of Works such as Project Officers for major building projects
  • Supervising Architects who approve payments on major projects and
  • Builders who are experienced in estimating construction costs for similar projects

TR 97/25 enables investors and Developers of projects to retain a suitably qualified professional with the most relevant experience and the most comprehensive schedule, even if that particular professional was not involved during the construction phase of the property.


This ruling has been strengthened by an ATO Issues Log in October 2006 (A235 Building Cost Estimate Acceptance). The ATO Issues Log confirmed that construction cost estimates from an appropriately qualified professional such as a Quantity Surveyor would be accepted in the case where a property owner had not made a reasonable effort to obtain the actual cost details from the previous owner.


The provision of construction costs as required by Subsection 262A (4AJA) is just a portion of the deductions calculated when completing a tax depreciation schedule.


When discussing depreciation, it is important to note that there are two areas in which a Quantity Surveyor will estimate and calculate deductions: the division 43 capital works deduction and division 40 plant and equipment depreciation.


In most cases it is the deductions related to plant and equipment items which lead to the greatest difference between depreciation schedules. Subsection 262 (4AJA) only refers to the deductions available from capital works deductions.


Plant and equipment will have a substantial impact on the depreciation deductions an investor or commercial property owner can claim when a specialist Quantity Surveyor compiles a comprehensive Capital Allowance and Tax Depreciation Schedule.


 


Bradley Beer
BMT Tax Depreciation
 


 




27th-March-2015

Liability limited by a scheme approved under Professional Standards Legislation